DCAA Form 1

The Form 1 process is an internal DCAA process intended to formalize DCAA’s disapproval of Current costs charged on a current year voucher. Where the FAR or DFARS reference DCAA’s ability to suspend or disapprove cost, the authority is limited to costs on a voucher, not historical costs already paid (DFARS 242.803(b)(i)(D) and FAR 42.803(b)(2)).

FAR 52.242-1, Notice of Intent to Disallow Costs, allows the Contracting Office (not DCAA) to issue the Contractor a written notice of intent to disallow specific costs, along with a contractor response (FAR 42.801). FAR 32.6 provides specific rules for collecting contract debts (including historical costs), with the CO, not DCAA, having responsibility. DCAA’s application of the Form 1 process ignores the set of rules contractually agreed to by the Contractor and its Contracting Officer.

DCAA's Approach

DCAA auditors use the DCAA Form 1 to suspend or disapprove costs on cost-reimbursable contracts.

Suspend: Auditors use the form to suspend unsupported direct or indirect costs until the required data are received and a determination can be made as to the allowability of the costs in question.

Disapprove: Auditors use the form to disapprove direct or indirect costs for which audit action is complete, the costs are considered unallowable, and the contractor does not concur. For disapproved costs, the procedures for issuing a Form 1 varies based on wither the costs are audit determined or ACO negotiated.

Suspended or disapproved costs are withheld from future billings. If the costs were charged direct to a contract, the unsupported costs will be withheld from a future billing.If the suspended or disapproved costs are indirect, they will be withheld from all contracts to which indirect costs were allocated, most likely through an adjustment to billing rates.